What is McKinsey looking for?

• Leadership• Problem Solving• Personal Impact• Achieving

What is McKinsey looking for?

• Leadership• Leading people and fostering productive teamwork are

critical to success here. You need excellent leadership skills to bring people together to drive positive change within organizations.

• Problem Solving: • McKinsey consultants help leaders solve their toughest

and most urgent problems. You must have superior intellectual abilities as well as a practical sense of what works in complex organizations.

What is McKinsey looking for?

• Personal Impact– McKinsey consultants work closely with a wide range of

people in their daily jobs. This calls for strong communication skills—particularly when addressing conflicting points of view. You have to be adept at building trusting relationships with clients to enlist their participation and support.

• Achieving– Our consultants strive to deliver distinctive and lasting client

impact. This requires tremendous energy, determination, and judgment, particularly when working with multiple stakeholders under tight deadlines.

What is McKinsey looking for?

• Book. Tim Darling.– Would I want this person on my team?– If I give them a few facts and point them in the

right direction, can they run with it?– Are they fun and interesting?– Will they be a positive force in the team room?– Will they make me and the team better?– Articulate a recommendation at a CEO-level

conversation

Interview questions

• Why McKinsey?• Why you want to be a Consultant?• Expect push backs in your answer• In 30 seconds. Why should we hire you?

Consultant profile

• High degree of energy• Social intelligence • Relax personality• Smile• Be positive (do not complain about work, weather, etc.)• During the interview imagine that the interviewer is a client

and you want to reward the client for the time spend with you.• Give the impression you are always in control. Do not let your

frustrations and anxiety show.• Try to maintain a conversational feel throughout the interview

How to analyze a case interview question?

1. Define and quantify the main objective (If the objective is not clear…ask)

2. Sometimes is good to ask for the products and/or services of the company. Leave room to build a table (margins, market share, price, etc)

3. Ask for a minute or two to collect your thoughts, and build a MECE tree (mutually exclusive and collectively exhaustive). The tree will tell you what you need to investigate and what questions to ask.

4. Try to summarize the key information in half the time it took the interviewer to explain them.

How to analyze a case interview question?

4. Note: find the right balance of structure, creativity and flexibility.– Creativity: use your own previous experiences in a way that

differentiates you from other candidates. – Structure: consider all possible elements and attack it in a systematic

and logical manner. – Flexibility: ability to refocus your approach base on either the

interviewer’s preferences or on new information that becomes available.

Definition: Drivers are the most influential elements in causing change. Levers are drivers that you can control. "drivers are the numerical inputs that could go into a model" and "levers are the unquantifiable things that you can change, like marketing." In practice, people talk about "drivers" when explaining a cause and "levers" when describing actions that can be taken to effect change.

The one framework that will cover at least 80% of your cases

Before •Quantify the objective•What are the firm’s products?•Why are we doing it?

During•Can (should) we do it?•How can we do it? (barriers and resources)

After•What will be the effects of us doing it? (competitor’s response and cannibalization)

The one framework that will cover at least 80% of your cases

Exhibit 6-6

Common case scenarios

1. Profitability, revenue and cost cases2. Pricing cases3. New product and market entry cases4. Merges and acquisitions (M&A)5. Volume6. Fixed and variable costs

1. Profitability, revenue and costs

• After the case. Think about the consequences of your proposals. Cannibalization, legal issues, cultural barriers, etc.

• Example: Company X is considering building an oil rig? why? Should they do it?

• Ask for the product or service. Should we break the problem by product and concentrate your solution only on product A or should you break the problem into regions (USA vs Europe), etc.

2. Pricing Cases• How to determine the optimal price?

– Set prices that maximize profits• Price could be a lever that a company can influence to manipulate

profits1. Clarify the problem

1. For whom we are setting the price? (end users or retailers) Do we have a target profit level.

2. …set a base line…1. Start.. Industry as a whole (competitors or substitutes)2. Find the breakeven point..cost-based price

3. …make price/value adjustments (per market segment)1. Once we have a baseline… adjust vs competitors2. Do not start a price war! Can we charge a premium in a given segment.

3. New product & market entry cases

• Before, during and after the case questions are specially important! Start the case by articulating that you want to step through each of the three in turn.

• The project is feasible if the profits (future benefits) are greater than the investment

• NPI cases.. Product matches customer needs? (market segmentation), pricing, volume and profits .. 5 forces to analyze futures risk in terms of price, volume, profits. For market entry use 5 forces in the current market. Why a market entry project failed? Look at 5 forces to diagnose.

• These types of cases mainly revolved around 2 elements: setting an expected price point and estimating (or determining how to maximize) the volume of the key products that the company will sell.– For price… look 2. Pricing cases– For Volume

• Identify the breakeven volume then if you identify higher volumes calculate ROI and end with the Porter’s 5 forces analysis.

• The key in many 3… cases is to calculate breakeven volume

3. New product & market entry cases

• Notes• Price*volume–(vc*volume+fc)=initial capital

investment• Breakeven volume=ICI/(price-vc) no additional

fc beyond the capital investment. • ROI=value of product (profits)/ICI (ignore the fc

entry in case interviews)• Volume also involve how to segment the

market

4. Mergers & acquisitions cases (M&A)

• Will we create significance value by making the acquisition?– Value created=standalone value of the target-purchase

price+the additional value we can add through synergies or similar

• Will the government legally allow us to proceed?– The main legal issue is anti-trust legislation– For two companies to work together effectively towards a

common goal, they have to share similar behavioral norms and comparable cultures

Synergies are the most interesting aspect of M&A cases. Synergies can be + or – specially in terms of volume and fixed cost.

5. Volume• Segment the market to determine if the product is meeting the customer

needs and the value drivers at each segment.• What are the top segments in terms of volume? Why?... Any levers?Three ways to structure sales volume:1. 4Ps

1. Price (too low or high, etc) 2. Product (meet customer needs vs competitors or vs industry) 3. Placement (and packaging… distribution channels in terms of quantity and quality or sales team) 4. Promotion (quantity or quality of advertising)

2. Short term/long term 1. Lever without changing costs (change price, bundle, license, etc)2. Lever changing cost (advertising, packaging, dist channels)

3. Mathematical approach: structuring numbers1. Volume=market size*market share

6. Fixed and variable costs

• Use the value chain approach• Or profits -> revenue & cost -> price*volume /

vc + fc• Talk to the interviewer to define and quantify

the objective. • Go layer by layer on your tree definition so the

interviewer can guide you.

Summary for the CEO

• Do not ask for a minute to collect your thoughts here. Do it in 30 to 60 seconds

1. Start by stating the objective in one sentence2. Give the specific answer or solution that you are

recommending. If you are not sure of your answer… stay confident on you proposal and stay the risks.

3. Follow with 2 or 3 reasons why you are suggesting the given solution. To do this, you can go to your tree and follow the path you choose.

4. Finally, say “we believe we can achieve this goal in… years but still need to check that all the data supports it”

5 mistakes that interviewees make

• Do not clarify and quantify the objective• They do not start attacking a problem with a

structure or they use a structure that does not help to illuminate the drivers of the case’s objective

• They create and share the structure but they do not follow it

Talk to German G.

• The interviewer wants you to do well• Se quedan todos lo que hacen una buena

entrevista• Selecciona tus historias en un formato PAR.• Entrevista en NY ingles y espanol.• Hacer al menos 20 casos.

Notes• Use the 80/20 approach. 80% of our profits come from 20% of our customers.• Be specifically careful if you are familiar with the industry in the case.• Use multiple sheet of papers to stay organize.• Consulting firms adapt to industry trends; they sometimes have lead. Think

about the firm as a dynamic organization that will change during your time working there. Ask the representative of the firm questions that will help you visualize what those changes are likely to be. For example: what is the rate of change of industry mix in the firm overall in the last three years? Has the firm entered new industries or left others?

• Financial ratios• Porter’s 5 forces can help you structure all of the possible external changes that

may affect future values for price, volume, and costs in the profit tree. • http://www.mckinsey.com/careers/how_do_i_apply/

how_to_do_well_in_the_interview/case_interview/techniques_and_tricks.aspx